Why Most Cross-Functional Projects Fail... And What You Can Do About It
There’s a dirty little secret about cross-functional projects: they usually fail. You might ask, “How can this be?” After all, cross-functional teams are a common practice among companies large and small, all over the corporate world.
Cross-functional teams have been around since the 1950s, when an American insurance company, Northwestern Mutual Life, brought people together from their financial, actuarial, investment, and other departments to study the impact of computers on their future business. This first cross-functional team gave them a significant competitive advantage as the use of computers became standard operating procedure. Seeing his hunch proven right, Northwestern Mutual Life’s CEO instituted cross-functional teams across his organization, increasing its market share and profitability.
So why are so many cross-functional projects doomed to failure? What are the keys to success? We’re going to look at the numbers, the stats, and the naked truth of why some cross-functional teams thrive, and others die like oranges in a sudden Florida frost.
And note, that the success or failure of many cross-functional business projects isn’t measured because their budgets are relatively small – so they don’t fall under the purview of a PMO or any measurement mechanism. They simply run out of steam due to organizational changes or run out of budget, or the company changes direction - having used an abundance of time and energy on the part of many different departments.
Harvard Business Review, in a recent study of 95 cross-functional teams from 25 different companies, found that a discouraging 75% of those teams were dysfunctional. HBR found that failing cross-functional teams scored poorly on at least 3 out of 5 of the following criteria:
- Meeting planned budget
- Staying on schedule
- Adhering to team roles and specifications
- Meeting customer specifications
- Aligning with the company’s corporate goals
They also identified several “red flags” that compromised the chance of cross-functional team success from the get-go. Cross-functional teams that had the following characteristics were not going to do well:
- No systemic approach
- Unclear governance
- Absence of accountability
- Goals that lacked specificity
- Failure to prioritize success
Check out these frightening, disheartening stats. According to Strategy and Business:
- Only 6% of employees on cross-functional teams believe that they consistently produce outstanding results
- 8% perceived their work being prioritized by leadership.
- 9% of cross-functional team members feel their teams always embrace a diversity of opinion.
On that last point, isn’t diversity of opinion the point of a cross-functional team?
But hey, it isn’t all doom and gloom. Cross-functional teams do succeed when they’re properly planned and managed. Some techniques will greatly raise the probabilities of success.
Projects that have a single high-level executive champion or governance by a higher-level cross-functional team have a 75% chance of reaching their goals. Without that governance or executive champion, cross-functional team success dropped to only 19%, according to HBR’s study. It’s only when cross-functional team members feel high-level buy-in that they can shed their preconceptions and biases and put the team first.
Salesforce commissioned a study that found that 86% of cross-functional team members said that a lack of collaboration and poor communication are responsible for workplace failures. In the same study, 97% of these people claimed that poor alignment directly impacts the success of each project.
How to Beat the Odds
Now, let’s look at some concrete ways to increase a cross-functional team’s chance of succeeding.
Follow up on all action items
Everyone has a full-time job outside of your project. You need to follow up and make sure that they are completing their action items – before these are due. Designate someone on the team to do this or rotate this around the team.
Don’t leave a meeting without everyone understanding what needs to be done, what decisions have been agreed to, and what risks exist. Record the things anything your team will need so they can build understanding or use the minutes as a reference.
Ask for a status
Do a status update at the beginning of every meeting so that everyone knows what is on track and off track. Get your teams on the same page right away to avoid wasting time and miscommunicating.
Use an online dashboard
Across time zones, the ability for people to add issues, update status, and generally contribute when others are offline is invaluable. Automated action item reminders also help to make sure everything gets done on time.
Keep project scope to a manageable size
Companies often see cross-functional teams as a dumping ground for many tasks they want to unload. A cross-functional team struggling under the weight of an oversize mandate is pretty much on life-support right away. Keep your scope under control and keep on track.
Monitor Key Performance Indicators
Keep an eye on the KPIs most relevant to your team’s success. Quantifying your success metrics will give you a true picture of where your team stands, much more than a “gut feeling” ever will.
Use a RACI
Understanding extended stakeholders early in the process is critical. A RACI will highlight who has to approve your project at various gates. This allows you to proactively assess if there will be risks that will derail or even cancel the project – due to a key stakeholder withholding approval for a key deliverable.
Be willing to pull the plug
Many managers can’t bear to admit that their cross-functional team just isn’t going to reach their goals. They bravely carry on instead of realizing that the team’s members and resources would be better used elsewhere. It’s the sunk-cost fallacy; throwing more money at a lost cause because they’ve already invested a large amount. If something isn’t working, just move on.
For a cross-functional team to be strong, innovative, and successful, it needs to be well-cared for. Virtira has managed hundreds of cross-functional teams, across many different industries. We know how to form, nurture, and lead teams of all shapes and sizes. We’d love the chance to help you with your project in any way possible.
Contact us at info@virtira. We look forward to hearing from you.
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